Flexible loans may end up hurting homeowners

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As mentioned in a previous column, it's difficult to have a housing slow down when there is very little inventory. That's why housing bubbles are viewed as regional occurrences and not as national trends. But inventory is only one component. What has become more of a factor is the incredibly flexible loan programs offered by many lenders. When a buyer can get 95 percent-100 percent financing on an investment property with stated income and a lousy credit score, it becomes a roadmap for trouble – especially in a flat market. Here's why: When a buyer purchases an investment property with very little or no money down, there's no margin for error when the renter bolts in the middle of the night because of a job loss or death in the family. The renter was basically paying the owner's mortgage, taxes and insurance with the monthly rent check. When no new renter surfaces and the place goes vacant for a few months, the owner quickly tires of coming out of pocket with the mortgage for the...